Photo: James Bomables
While January proved to be a relatively cool month for the Toronto real estate market, one property type looks like it could buck the trend by having a strong start to 2018.
“Everybody is looking to the most affordable housing types this year,” Zoocasa managing editor Penelope Graham told BuzzBuzzNews during a recent Facebook Live interview. “We’re anticipating that condos are going to have another very strong year, as everyone’s being knocked back a peg in terms of what they can afford.”
According to Graham, new mortgage rules that came into effect on January 1 will seriously limit the purchasing power of both first-time and move-up buyers. With less money to spend, they’ll likely look to the GTA’s most affordable market — condos.
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“For first-time buyers who are getting into condos as their first real estate move, they might even be downsizing their expectations, perhaps looking at a one bedroom instead of a two, or maybe forgoing a parking space or a storage unit,” she says.
Many industry watchers agree, citing affordability as a main reason that the condo market will remain hot, even as other property types cool.
“While many end users have been looking to the new condominium apartment sector for more affordable homes, some are now starting to be priced out of this segment as well,” writes Altus Group executive VP of research consulting services Patricia Arsenault, in a statement.
According to Urbanation, high demand and tight supply made for a red hot market in 2017, and the conditions are unlikely to change anytime soon. One of the reasons for the strength of the market is its continued attractiveness to investors.
“Urbanation found that of projects that were completed and registered in 2017, average resale values were 42 per cent higher than their average presale opening prices,” reads a statement from Urbanation VP Shaun Hildebrand. “Furthermore, it was calculated that most newly completed condo projects were able to generate positive cash flow in the rental market last year, factoring in an 80 per cent loan-to-value mortgage, condo fees and taxes.”
As for what the year has in store for the rest of the GTA housing market? The Toronto Real Estate Board is predicting that sales will remain flat, while demand pushes prices higher.
“Strong local economic conditions, including home growth above the rate of inflation, coupled with an increased immigration target will result in sustained household growth in the GTA, both in 2018 and over the long term,” reads a recent report by the board. “Despite a dip in home sales, Toronto market conditions will remain balanced enough to see support for home prices, especially as we move toward the end of 2018.”